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In isolated Myanmar, sanctions breed bogus US franchises

Experience a tiny 'Wal Mart' and a 'KFC' that serves fries with chopsticks.

country’s few IP lawyers, he counts KFC, Panasonic, Adidas and scores of other well-known corporations among his clients. In recent months, he has had to issue cease-and-desist orders to a bogus KFC with a Yangon storefront so convincing that the American embassy welcomed its arrival on Twitter.

“Frankly, most people have never heard of IP. Even very successful businessmen,” he said. “Even if they know about it, they just don’t think it’s important.”

As it stands, the country’s IP protections are cobbled together from a few vague statutes as well as laws dating back to British colonial era, in which Myanmar (then Burma) was ruled as a part of India. Attorneys still resort to legal interpretations of the antiquated “Burma Copyright Act of 1911,” which concerns itself with the rights of playwrights, and the ancient “Merchandise Marks Act,” which governs how importers should fix labels on oil lanterns and iron spigots.

Thein Aung and his peers have led a charge to convince the government that dismal IP protections will scare off potential investors and ultimately sabotage a long-awaited ascent to modernization. “My clients have said, ‘How can we invest if you can’t protect our technology? Technology is our soul,’” Thein Aung said. “I told the government that we must have IP laws or else no one will come here.”

Given the creaky condition of Myanmar’s IP protections, foreign firms are wise to consider a “wait-and-see approach,” said Mark Litvack, a partner in the US-based, globally focused Pillsbury legal firm, which has advised clients on doing business in Myanmar.

“Myanmar is an extremely attractive opening market with over 50 million consumers, terrific location for trade and ample natural resources,” Litvack said. “Companies are coming.”

But he cautions that the nation will be “viewed as a pariah unless it accepts its responsibility to protect the legitimate IP interests of Western and other foreign firms. As IP is a driver of value and profits, corporations will not be willing to invest in countries that are not willing to protect that investment.”

The push for better regulation, however, is finally making headway. A proposed law, written in part by Thein Aung, is in its 10th draft and will be submitted to parliament soon. With no objections, the law could pass within six months, he said.

The law in its current iteration seeks to wipe out most standing trademark and copyright filings and request all businesses — domestic and foreign — to re-register on a clean slate. “A company like 7-Eleven would have to re-register. The infringer could re-register too,” Thein Aung said. “But they would not have the evidence. So they’d lose.”

This process is ripe for complicating factors: judges befuddled by new IP laws and well-connected local operators among them. Copyright infringers, particularly those who’ve built up borrowed foreign brand names with their own investments, will seek out-of-court settlements, Thein Aung said.

“The infringers won’t just go away,” he said. “They won’t immediately surrender. It will take much time.”

“We built this. It's ours.”

There are no blue-light specials at Yangon’s "K-Mart." When the city’s shoddy power grid shorts out — as it does incessantly during hot season — there are no lights at all.

Since 1996, the downtown shop has sold the sort of goods that, while commonplace in the United States, can be tough to locate in Myanmar. Think Coco Pops, Raid bug spray and disposable Pampers.

Yes, the owners are familiar with that other Kmart. But they insist the shared name is just a coincidence. This "K-Mart’s" title is derived from the name of its founder, Ko Htoo, according to an English-speaking associate named Jo Jo.

“Ko Htoo has never been to America and he’s definitely never been to a Kmart,” said Jo Jo, 55, a Myanmar national who emigrated to San Francisco but recently returned to start an airport shuttle service.

“Why should he be worried about trouble from Kmart anyway?” he said. “They can barely keep stores open in America. If they complain, we’ll just call it K-dot-Mart. It’s different enough.”

Just outside "K-Mart’s" doors, a “Burger Queen” street stall serves up hot dogs and cheeseburgers along with “Gold Fish Ball” and “Crab Stick.” The aproned grill operator, resting on a cheap plastic stool, insists she has never heard of Burger King.

Nor has the clerk at the shop across the street ("7-Day") heard of the planet’s most abundant convenience store (7-Eleven) despite the striking familiarity of its green, orange and red signage. The shelves are stocked with Coke and Red Bull but "7-Day" has no Slurpees, no Big Gulps and no cash register. The shopkeeper gives change in tissue packets when she runs out of small bills.

“Did you say 7-Eleven?” she asks. Her face betrays no flicker of recognition. “Maybe the owner has heard of it. But I haven’t.”

Appropriating American consumer imagery is most effective on shoppers who pick up morsels of US culture through pirated DVDs or the internet, according to Wuttha Mg Mg, the 37-year-old owner of Yangon’s “iCloud” electronics store. (He has already registered the name as his own.)

“Even if they don’t know 'iCloud' refers to Apple’s online storage, they can tell it represents cutting-edge technology,” he said. “That’s what we want to associate with the shop.”

Inside the eateries and shops with titles that siphon US branding power, shoppers will encounter few items recognizable to American consumers. "Wal Mart" sells Chinese-made Huawei phones; ICFC’s chicken thighs are skimpy and breaded beyond recognition.

But Nan Thein, the barefoot, 58-year-old proprietor of “Best Buy,” offers a pure, undiluted cut of American consumer goodness. Her roadside shop is filled with products that were actually sold in a legitimate American Best Buy and flown to Myanmar. Her chief importer is the husband of her daughter, who sells gems in New York City.

The imitation "Best Buy’s" business model is a study in globalization-era complexity: US firms manufacture items in neighboring China, ship them to America, sell them at retail prices to her son-in-law, who piles the goods in his luggage and unloads them at the Yangon shop on trips home.

The shop — a tiny, open-air storefront overlooking a patch of sunbaked dirt — offers non-counterfeit Beats by Dre headphones, copies of the video game Halo for Playstation 3 and AT&T mobile phones. Its marquee is an impressive depiction of the blue-and-yellow Best Buy logo, recreated in a Yangon signage shop.

“Best Buy is a store with a strong logo and a good reputation. So we thought it would be perfect,” said Nan Thein. She suspects most of her customers grow familiar with the Best Buy logo when they go online to check the US selling price of certain electronics. “If people can’t spend much, they go with Chinese stuff,” she said. “But if they’ve got money, they want real US products.”

And if a representative from the legitimate Best Buy appears someday at her cement-walled shophouse? “I would tell them to sit down and negotiate with me,” Nan Thein said. “We built this. It’s ours.”